Have you paid your taxes? LNR President Pierre-Yves Revol and Stade Français owner Max Guazzini
The landscape of French sport is set to change next year as the French Government pushes ahead with a tax reform that will cost Top 14 clubs millions of Euros.
The French senate will vote on a bill on Thursday that will bring an end to a tax loophole in the payment of salaries to professional sportsmen and women in France.
In 2004, the government created tax break to help French clubs compete with richer foreign leagues, especially those of English and Spanish soccer.
The Droit à l'Image Collectif (DIC), allows clubs to treat up to 30 per cent of a player's income as "image rights", in other words the player's share of revenues from selling merchandise or other lucrative spin-offs, rather than salary.
The DIC enabled French clubs to avoid some of France's costly social security and employment taxes. Cue many French clubs going on massive spending sprees and singing big-money contracts with the likes of Jonny Wilkinson, James Haskell et al.
The problem is, the taxmen in Paris have realised that the law is costing the national coffers 30 millions Euros a year. So now they're pulling the plug, starting in June 2010.
That's not good news for the clubs who are contractually bound to continue paying the salaries they signed players for, despite the fact that budget are suddenly going to balloon.
"The professional rugby player (in France) is in danger," said LNR President Pierre-Yves Revol.
"The DIC is not a tax advantage. To erase it now would mean a extra cost of 500 to 800 000 Euros per club. You can't change the rules in the middle of a match."
For clubs like Bourgoin or Montauban, who are already struggling to balance their books, such a change could have devastating effects.
"[The tax changes] will cost me at least 1 million Euros next year," Toulon President Mourad Boudjellal told French daily Sud Ouest.
"I don't know where I'm going to find 800 000 Euros," said irritated Stade Français owner Max Guazzini.
"It's a disgrace. It shows that when it comes to sport, France is a third world country. We've been stabbed in the back!"
The government is having none of it however.
"This is public money, money that belongs to the French people," said Budget Minister Eric Worth, who said the money saved in taxes raised from professional sports should be redeployed into amateur sport.
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